RMS tools can boost revenue in several ways, minimizing errors and unnecessary wage expenditure. In addition, they help recurring revenue businesses with quote-to-cash processing and eliminate siloed systems that are difficult to integrate with front-end tools.
Revenue management is about optimizing financial results and is particularly popular in hospitality, which operates with a perishable inventory. It involves anticipating consumer demand and adjusting product availability and price to maximize revenue.
Inventory Management
In any business, knowing when to restock inventory is essential. A lack of inventory management systems can be disastrous if you sell products with a finite shelf life, like perishable food or fast-fashion clothing. And even if your product has longevity, it’s important to track trends to avoid frequent inventory write-offs, which can hurt profitability. The most effective companies manage their inventory with sophisticated software.
Depending on the industry and product, these tools may include pricing systems, integration with other hotel software, data visualization options, forecasting management options, and more. You must choose the right system for your needs, but before you do, familiarize yourself with the available features to ensure it will meet your expectations. While revenue management is essential for businesses of all sizes, it’s precious for hotels and other hospitality industries with high fixed costs and perishable inventory.
To optimize financial results, these firms employ revenue management strategies that leverage real-time consumer demand to set prices in response. This is called yield management, a critical element of most revenue management strategies. Some businesses wouldn’t be able to offer their products at all without it.
Customer Relationship Management (CRM)
The customer relationship management (CRM) category entails any process, strategy, or software/technology that helps companies manage external customer relationships. This includes everything from marketing campaigns that attract a targeted audience to customer service activities that keep your business in touch with existing clients, encouraging loyalty and preventing customer churn.
The best revenue management system offers a CRM component allowing centralized contact information and data analysis. This enables salespeople to have a clear view of their prospects, and it can help them follow up with potential buyers, identify upselling and cross-selling opportunities, and initiate customer retention programs that build long-term client relationships.
Adding a CRM component to your RMS can also help you deliver more personalized guest experiences. For example, some systems allow guest-facing apps that allow customers to purchase items they might need during their stay — like towels, soap, and bathrobes. This add-on to your hotel technology stack can improve your revenue performance by lowering your guest acquisition cost and increasing guest retention.
Another way a CRM can improve your revenue performance is by reducing commission costs for bookings made through distribution channels other than your hotel website. By promoting special offers or loyalty programs to drive direct bookings, your business can eliminate commission fees and boost overall revenue.
Pricing
Using predictive analytics, these systems analyze data in real-time and then make adjustments to fill as many seats as possible without overbooking or underselling. This process is known as dynamic pricing, and it has become a critical tool for airlines to optimize financial results.
Revenue management systems also identify pricing opportunities, track market changes, and forecast demand patterns. Hotels don’t just use these tools; they’re also increasingly being utilized in the airline industry, and many of today’s cutting-edge technologies are aimed at improving capacity optimization, customer segmentation, pricing strategies, and forecasting accuracy.
Unlike yield management, revenue management focuses on more than just price optimization. It focuses on the overall business strategy and may include other areas, such as in-depth analysis. However, although the two concepts are closely related, they shouldn’t be considered interchangeable. By leveraging automation, revenue management systems free up the time of hotel revenue managers to focus on long-term strategy development and guest experience initiatives.
Reporting
In some industries, implementing revenue management is not just a good idea; it’s required. For example, hotels have fixed costs and a perishable inventory that they must manage effectively to maximize revenue. Revenue management optimizes financial results by using predictive analytics to understand consumer demand and optimize pricing and inventory availability.
It can help you get more out of your product, offer specific deals to customers who value it the most, and capitalize on opportunities in ways that fixed pricing can’t. In some cases, businesses wouldn’t exist without it. For others, it’s the key to keeping customers happy while delivering a consistent experience across channels and reducing billing errors.
The right RMS system can help you track and automate many of the abovementioned processes. It’s worth investigating the available features and finding the best solution for your business. Depending on the RMS, features may include data visualization and forecast management options. For example, some solutions allow you to track different KPIs based on your needs and industry.
The more you know about your KPIs, the better you’ll be able to spot problems and make improvements. For instance, the average daily rate of hotel and rental businesses is a standard metric. This metric ignores other sources of revenue and unrented periods, which is an important consideration.
